October 2013 Best Practices in Asset Management

Transcription

1 October 2013 Best Practices in Asset Management 2013-R-08

2 ABSTRACT The U.S. Army Corps of Engineers (USACE or Corps) serves the Armed Forces and the nation by providing vital engineering services and capabilities in support of national interests. With environmental sustainability as a guiding principle, the Corps is working diligently to strengthen our nation s security by building and maintaining America s infrastructure and providing military facilities where our service members train, work and live. The USACE is the steward of the fourth largest asset portfolio, by monetary value, of all federal agencies. USACE is responsible for almost a quarter trillion dollars (i.e., plant replacement value) worth of the nation s water resources assets. Water resource development activities, including flood risk management, navigation, recreation, environmental stewardship and emergency response, are a core part of USACE Civil Works programs. These programs are responsible for the Civil Works activities of eight engineering divisions and 38 districts nationwide, employing 294 officers and 23,033 civilian employees who operate and maintain civil infrastructure with a replacement value of $250 billion. The infrastructure portfolio includes more than 693 dams, 4,254 recreation areas, over 12,000 miles of commercial inland waterways, and approximately 926 harbors. The wide range of Corps assets consisting mainly of water resources infrastructure, and the varied levels of ownership and responsibility add complexity to the task of managing water infrastructure assets. The Corps infrastructure portfolio includes massive structures such as bridges; locks and dams; reservoirs; levees and buildings; hydropower production facilities--penstocks and turbines; and other equipment such as boats and dredges. In addition, the Corps owns or controls landscape features including recreational sites channels, ports and harbors. This large, complex mix of infrastructure creates a high degree of diversity, leading to scenarios where recreation sites, which provide highly visible benefits to few campers, compete for asset management attention with large dams, which provide almost unseen benefits to many. Another complicating factor is that the Corps does not own or control all water resources infrastructure. The Corps coordinates with other federal and non-federal asset owners. In addition, under public law 84-99, the Corps has defined responsibilities for infrastructure that was built by the Corps and turned over to others, as well as for qualifying infrastructure constructed by others. Mainly, the Corps is responsible for restoring this infrastructure following an extreme event. This restoration activity competes with other assets for management attention and budgetary resources. Typically, restoration is funded by borrowing budgetary resources planned for other infrastructure. This "loan" is later repaid from supplemental appropriations. This complexity makes management of the Corps infrastructure much more difficult than most organizations infrastructure management and challenges. The intent of this effort is to evaluate all available sources of information regarding asset management practices, including those from other agencies in the United States and international agencies, and locate candidates of best practices in asset management that could be adapted for use by the USACE. This report was prepared by Woolpert on behalf of the Institute for Water Resources (IWR). ii U.S. Army Corps of Engineers

3 ACKNOWLEDGEMENTS The study was conducted by Principal Investigator John Przybyla, Woolpert, Inc. senior vice president. The document has been through eight drafts and was reviewed by nearly 20 individuals, whose help was invaluable in improving the final product. The review team includes the following individuals in no particular order: Dr. Mark Sudol, U.S. Army Corps of Engineers (USACE) Institute for Water Resources (IWR) Wen Chang, USACE IWR Lauren Leuck, USACE IWR Henry Langlois, USACE IWR Norm Starler, former USACE employee Mark Pointon, USACE IWR Jeff Jenson, USACE IWR Lenna Hawkins, USACE Dave Lichy, USACE Steve Cone, USACE Edward Hecker, USACE Eileen Takata, USACE Doug Ellsworth, U.S. Army Engineer Research and Design Center (ERDC) Robert Leitch, USACE Katelyn Noland, USACE IWR Dr. Raed EL- Farhan, Woolpert Bryan Dickerson, Woolpert Steve Schwabe, Woolpert Edward Singer, Woolpert Institute for Water Resources iii

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5 Table of Contents Introduction... 1 Background... 1 Driving Forces... 1 Purpose... 2 Asset Management Definition and Vision... 2 Asset Management Source Review... 4 Sources Investigated... 4 U.S. Federal Agencies... 4 International Government Agencies... 4 U.S. Professional Organizations... 5 International Professional Organizations... 5 Software Products... 5 Key Findings of Source Review... 6 Best Practices in Asset Management... 8 Introduction... 8 Best Practice Strategies... 8 Institute of Asset Management - PAS International Infrastructure Management Manual Delft University of Technology/Next Generation Infrastructures Case Studies City of Cape Town Electricity Services Hunter Water Corporation, Australia Watercare Services, New Zealand Seattle Public Utilities Albury City Water, Australia USACE Approach to Asset Management Institute for Water Resources v

6 Introduction Sources Consulted USACE Approach Annual Budget Justification Program Management Plan Civil Works Water Resources Transformation USACE Risk-Informed Approach to Asset Management Comparison of USACE Approach to Best Practices Introduction Consolidated Best Practices Part 1 - Define Requirements Part 2 - Develop Lifecycle Management Strategies Part 3 - Implement Asset Management Recommendations Introduction Recommended Best Practices Changes to Existing Asset Management Plan Potential Staged Implementation Plan Stage 1: Develop an Interim Asset Management System Using Existing Data Stage 2: Develop a Comprehensive Best Practices Implementation Stage 3: Implement All Aspects of Best Practices in Asset Management Potential Outcomes Summary Appendix A Asset Management Source Review Documentation Endnotes References vi U.S. Army Corps of Engineers

7 List of Figures Figure 1: PAS 55 asset management system Figure 2: IIMM asset management framework Figure 3: Mass Spring metaphor of asset management Figure 4: Change in operating costs over time Figure 5: Watercare's asset management organizational framework Figure 6: Albury CC projected capital renewal expenditure Figure 7: USACE Civil Works asset management framework Figure 8: Civil Works Strategic Investment Framework Figure 9: Operational Condition Assessment/Operational Risk Assessment Figure 10: Assigning condition ratings Figure 11: Probability of failure Figure 12: Consequence of failure Figure 13: Impact recovery duration and monetary impacts Figure 14: Typical lifecycle asset cost/value graph over time Figure 15: Typical combined lifecycle cost/value graph over time List of Tables Table 1: Organizations using IIMM asset management methodology Table 2: Performance measures Table 3: Standard asset registry information Table 4: Asset monitoring techniques Table 5: Risk consequence rating system Table 6: Multi-Criteria Analysis scoring system Table 7: Albury City Water service levels and performance measures Institute for Water Resources vii

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9 INTRODUCTION BACKGROUND The U.S. Army Corps of Engineers (USACE or Corps) serves the Armed Forces and the nation by providing vital engineering services and capabilities in support of national interests. With environmental sustainability as a guiding principle, the Corps is working diligently to strengthen our nation s security by building and maintaining America s infrastructure and providing military facilities where our service members train, work and live. The USACE is the steward of the fourth largest asset portfolio, by monetary value, of all federal agencies. USACE is responsible for almost a quarter trillion dollars (i.e., plant replacement value) worth of the nation s water resources assets. Water resource development activities, including flood risk management, navigation, recreation, environmental stewardship and emergency response, are a core part of USACE Civil Works programs. These programs are responsible for the Civil Works activities of eight engineering divisions and 38 districts nationwide, employing 294 officers and 23,033 civilian employees who operate and maintain civil infrastructure with a replacement value of $250 billion. The infrastructure portfolio includes more than 693 dams, 4,254 recreation areas, over 12,000 miles of commercial inland waterways, and approximately 926 harbors. The wide range of USACE assets consisting mainly of water resources infrastructure, and the varied levels of ownership and responsibility add complexity to the task of managing water infrastructure assets. The USACE s infrastructure portfolio includes massive structures such as bridges; locks and dams; reservoirs; levees and buildings; hydropower production facilities--penstocks and turbines; and other equipment such as boats and dredges. In addition, the USACE owns or controls landscape features including recreational sites channels, ports and harbors. This large, complex mix of infrastructure creates a high degree of diversity, leading to scenarios where recreation sites, which provide highly visible benefits to few campers, compete for asset management attention with large dams, which provide almost unseen benefits to many. Another complicating factor is that the USACE does not own or control all water resources infrastructure. The USACE coordinates with other federal and non-federal asset owners. In addition, under public law 84-99, the USACE has defined responsibilities for infrastructure that was built by the USACE and turned over to others, as well as for qualifying infrastructure constructed by others. Mainly, the USACE is responsible for restoring this infrastructure following an extreme event. This restoration activity competes with other assets for management attention and budgetary resources. Typically, restoration is funded by borrowing budgetary resources planned for other infrastructure. This "loan" is later repaid from supplemental appropriations. This complexity makes management of the USACE infrastructure much more difficult than most organizations infrastructure management and challenges. DRIVING FORCES The current USACE Civil Works infrastructure represents a substantial investment of the nation s resources and delivers daily benefits to almost every U.S. household, ranging from water-borne transportation to hydroelectric power, and recreational opportunities to flood protection. As the infrastructure USACE operates ages, it often becomes more difficult and more expensive to maintain to meet performance goals, and to efficiently provide the economic and environmental benefits for which they were designed and constructed. Conversely, the annual federal budget for the USACE Civil Works funding has been flat or falling for a number of years, and the operations and maintenance portion of that budget is not adequate to maintain the current infrastructure over time. Given the current economic climate, significant additional funding is not expected from the U.S. government. This situation, left unchecked, will result in a loss of the integrity and operational capability of this infrastructure over time. U.S. Army Corps of Engineers 1

10 Because of the limited availability and inconsistency of funding for operations and maintenance, the USACE often defers maintenance from its planned (and optimal) time until funding is available. Over time, this results in an invisible, but insidious reduction of the ability of the infrastructure to support its mission. The result is a decrease of performance, increased incidence of operational outages, loss of revenue, and increased risk of catastrophic failure. The USACE is now employing a multi-pronged approach to continue to enable the citizens of the U.S. to receive benefits from these investments. This approach includes: Defining the concept of value to the nation (VTN) from each project in the USACE Civil Works infrastructure. Determining if local government, state, or private organizations might be better stewards of some assets. Utilizing a comprehensive, best-practices asset management approach to provide the most cost effective operations and maintenance of those assets that remain with the USACE. Determining which items must continue to be supported, and which, based on their value, may no longer be supported by the USACE. The USACE Civil Works Strategic Plan for addresses these needs through the USACE Initiative for Sustainable Water Resources Infrastructure. Specifically, Theme 1, Lifecycle Infrastructure Management, incorporates multiple sub-themes which are relevant to this report, including one that is specific to asset management. The USACE understands that when fully implemented, asset management must provide the means to maintain performance and meet the needs of the users of its asset portfolio at an optimized and sustainable overall cost. This document is focused on maximizing the potential for asset management practices to fulfill needs and designed purposes. PURPOSE The intent of this effort is to evaluate all available sources of information regarding asset management practices, including those from other agencies in the United States and international agencies, and locating candidates of best practices in asset management that could be adapted for use by the USACE. The goals of this effort include the following: Review asset management practices. Identify best practices in asset management. Inventory computer-based tools for asset management. Compare USACE asset management approach to best practices. Determine if suitable alternate strategies exist. Develop recommendations for next steps. ASSET MANAGEMENT DEFINITION AND VISION Asset management has many potential definitions. USACE defines asset management in the Program Management Plan for Asset Management as the following: Fundamentally, asset management is a disciplined corporate approach for the management of the USACE asset portfolio. It requires integration and collaboration with all corporate organizations and programs, and their respective activities and contributions 1. The USACE defines its vision for asset management as the following: 2 U.S. Army Corps of Engineers

11 A persistent catalyst for holistically integrating and enhancing the sustainment, restoration, modernization and disposition of USACE water resources [assets] to continually serve the nation. 2 This document concurs with both the definition and vision of asset management as defined by the USACE. U.S. Army Corps of Engineers 3

12 ASSET MANAGEMENT SOURCE REVIEW SOURCES INVESTIGATED A literature search was conducted to locate sources of information on best practices in asset management worldwide. The investigation was conducted primarily through the Internet, although much of the research involved following up on references to items initially located on the web. Research was limited to organizations that managed at least one of the types of assets USACE manages. During the investigation, it became obvious that some of the best practices in asset management have come from professional organizations, so the research was expanded to include the relevant organizations. The organizations selected for research included ten U.S. federal agencies, seven U.S. professional organizations, 13 international professional organizations, eight international government agencies and six software products. For each source, the following information was captured: Relevant asset types included. Documented asset management process. Elements included in the asset management approach. Maturity/sophistication of asset management. Applicability to USACE infrastructure types. The organizations selected for evaluation are as follows: U.S. FEDERAL AGENCIES U.S. Coast Guard (Department of Homeland Security [DHS]) U.S. Navy (Defense Department [DoD]) Bureau of Land Management (Department of the Interior [DOI]) Bureau of Reclamation (DOI) National Park Service (DOI) Federal Highway Administration (Department of Transportation [DOT]) Department of Energy (DoE) Environmental Protection Agency (EPA) General Services Agency (GSA) National Aeronautics and Space Administration (NASA) Tennessee Valley Authority INTERNATIONAL GOVERNMENT AGENCIES St. Lawrence Seaway Management Corporation British Waterways Federal Ministry of Transport (Germany) Ministry of Infrastructure and Environment (Netherlands) Waterways and Sea (Belgium) Infrastructure Australia Institute of Water Resources and Hydro Power Research (China) Public Works Research Institute (Japan) Korea Water Resources Corporation Infrastructure Canada 4 U.S. Army Corps of Engineers

13 U.S. PROFESSIONAL ORGANIZATIONS Federal Facilities Council (FFC) American Public Works Association (APWA) National Association of Clean Water Agencies (NACWA) International Facility Managers Association (IFMA) Association of Physical Plant Administrators (APPA) New Mexico Environmental Finance Center Maryland Center for Environmental Training INTERNATIONAL PROFESSIONAL ORGANIZATIONS World Association for Waterborne Transportation Infrastructure (PIANC) Institute of Asset Management (IAM) Institute for Sustainable Infrastructure (ISI) European Federation of National Maintenance Societies (EFNMS) Asset Management Council (Australia) Institute for Infrastructure Asset Management (IIAM) National Asset management Working Group (Canada) Asset Management Quarterly International (AMQI) International Organization for Standardization (ISO) Global Forum on Maintenance and Asset Management (Switzerland) Next Generation Infrastructures (Netherlands) Centre for Infrastructure Management (Canada) World Congress on Engineering and Asset Management (Australia) SOFTWARE PRODUCTS BUILDER/ROOFER/MicroPAVER (USACE) Harfan RIVA SIMPLE (WERF) Envision (ISI) Infrastructure Optimization (Woolpert) The results of the research are tabulated in a spreadsheet titled Asset Management Source Review, which is provided in Appendix A. U.S. Army Corps of Engineers 5

14 KEY FINDINGS OF SOURCE REVIEW UNITED STATES Information regarding asset management programs of U.S. federal agencies showed that there was generally a high degree of similarity among U.S. federal agencies asset management practices. This is due to many reasons, including the following: Many federal agencies began their asset management implementations in response to Executive Order (4 February 2004), and have remained focused on its requirements. Other than the USACE, few federal agencies manage facilities for primary use by others. Therefore, their requirements and expectations are more similar to each other than to the USACE. The Defense Department military branches all use a similar approach, which is somewhat less sophisticated than the current USACE Civil Works approach. Multiple agencies fall under the umbrella organization of the Department of the Interior (DOI), and DOI agencies generally have a consistent approach. The focus of many federal agencies on the requirements of EO , which is centered on the desire to minimize acquisition and reduce holdings of real property, means that their programs have only limited applicability to the needs of the USACE. Implementation of EO 13327, which is performed by the Federal Real Property Council (FRPC) under the oversight of the General Services Agency (GSA), is by its very nature focused on land and facilities. While this EO is relevant to the USACE activities, it does not include specific methodology for addressing civil-type assets such as locks and dams that can fail if not properly maintained. Its requirements are only applicable as a baseline to the much more sophisticated requirements of the USACE. The Government Performance and Results Act 4 (GPRA), which was enacted in 1993, is designed to improve government project management. The GPRA requires agencies to engage in project management tasks such as setting goals, measuring results, and reporting their progress. In order to comply with the GPRA, agencies produce strategic plans, performance plans, and conduct gap analysis of projects. Although the GPRA was not focused on asset or real property management, it defined a series of implementation approaches that mimic those of asset management. The USACE has adopted both EO and GPRA, and has implemented a number of organizational changes as a result. Both the EO and GPRA guidance together provide elements that should be included in a comprehensive asset management program, but neither provides a complete template. Based on the information available from the agencies investigated, two potential sources of asset management knowledge outside the Department of Defense (DoD) are the Bureau of Reclamation (Reclamation) and the National Park Service (NPS). While both have strong maintenance and asset management programs, neither appears to have implemented asset management in a more sophisticated manner than the USACE. In this case, neither is likely to provide much added guidance for improving USACE practices. However, it is widely known that relatively sophisticated levels of asset management implementations abound in U.S. states (transportation assets) and larger municipal governments (transportation, water and sewer assets). While few of these agencies provide detailed implementation documentation, some, such as the Cities of Seattle, Washington and Columbus, Ohio reference sources from professional organizations as inspiration for their asset management programs. This will be discussed in greater detail below. INTERNATIONAL Although information was gathered from organizations that manage similar infrastructure from across northern Europe and the largest countries in Asia, there was very little detail on asset management 6 U.S. Army Corps of Engineers

15 programs that was gleaned directly from the government sources. Instead, it was discovered that like many non-federal locations in the U.S., the agencies that implemented asset management used information developed by outside professional organizations as the foundation for their programs. ASSET MANAGEMENT IN RESPONSE TO PUBLIC-PRIVATE PARTNERSHIPS The strongest international asset management programs are in the countries in which the central government has made long-term funding for infrastructure asset management a top priority, and has promulgated requirements to both their federal and local public agencies. This was in response to the privatizing of formerly public utility systems and the need for government oversight to maintain longterm viability of these systems infrastructure. Canada, Australia, New Zealand, and the United Kingdom have been leaders in this process. In all cases, this effort spurred the development of peerdeveloped best practices in asset management by professional organizations, which originated in these countries. While many of the countries of Western Europe have implemented comprehensive asset management programs, for the most part, their programs are less sophisticated than those of USACE. This may, in part, be due to the fact that much of their infrastructure was built after World War II and has not required the level of attention of much of the infrastructure of the U.S. PROFESSIONAL/PRIVATE ORGANIZATIONS The best information regarding state-of-the-art practices in asset management comes from professional, or private sector, organizations. Based on evaluation of hundreds of documents from all of the agencies listed above, the following general sources of asset management thought leadership have been selected for in depth investigation: International Infrastructure Management Manual (Australia, New Zealand) Institute of Asset Management (British PAS-55) Delft University of Technology (Netherlands) In addition, other sources of information on best practices in asset management have been evaluated based on specific asset types by the following organizations: National Association of Clean Water Agencies International Facility Management Association SOFTWARE VENDORS Many of the software vendors of products used for asset management developed publications with good insight into innovative practices in asset management. The GIS software vendor Esri is in the process of developing a book titled, Best Practices for Building a Sustainable GIS and Asset Management Integration, which is due to be published in late SUMMARY Through this exhaustive review of worldwide Asset Management practices, standards for best practices have emerged. The best practices are described in greater detail in the following section. U.S. Army Corps of Engineers 7

16 BEST PRACTICES IN ASSET MANAGEMENT INTRODUCTION At one time, the best practices in asset management were limited to designing/ constructing for the long-term, and performing effective preventative and corrective maintenance operations once assets were placed into service. Over time, the understanding of asset management has grown to be very sophisticated and developed into its own discipline. As described above, the best practices in asset management are being employed today in Great Britain, Australia, New Zealand, and Canada. These best practices came about in reaction to the privatization of formerly public utilities that began 20 to 30 years ago. In order to protect the public s interest in the long-term maintenance of the infrastructure, the concept of optimizing lifecycle infrastructure asset costs was developed, and over time refined to the highest level of sophistication. The USACE is now entering a situation somewhat similar to the one that spawned some of these best practices. After analyzing the worldwide sources for best practices in asset management, the following were selected as resources for knowledge: Overview of best practices: Institute of Asset Management PAS-55 Best implementation details: International Infrastructure Management Manual (IIMM) Innovative Research: Delft University of Technology Each of these will be discussed in detail below. BEST PRACTICE STRATEGIES INSTITUTE OF ASSET MANAGEMENT - PAS 55 The Institute for Asset Management (IAM) is the driving body behind the development of the British Standards Institute s Publicly Available Standard 55 (PAS 55) for optimized management of physical assets. PAS 55, which is asset-type independent, provides a 28 point specification for establishing and verifying an integrated whole-life management system for physical assets. It is mostly focused on developing the philosophy and framework to enable asset management, rather than the specifics of any individual asset management implementation. PAS 55 defines asset management as the following: Systematic and coordinated activities and practices through which an organization optimally and sustainably manages its assets and asset systems, their associated performance, risks, and expenditures over their life cycles for the purposes of achieving its organizational strategic plan. 5 This definition is consistent with the USACE s definition of asset management. PAS 55 incorporates a complete set of principles as shown below in Figure U.S. Army Corps of Engineers

17 Figure 1: PAS 55 asset management system. Source: The Institute of Asset Management. 7 PAS 55 is largely limited to describing principles of implementing asset management, rather than how to implement it for a specific asset type. As shown in the diagram, PASS-55 requires development of an asset management policy, which serves as the basis to develop organizational values, functional standards, and requires asset management processes for acquisition, utilization, maintenance and disposal of assets. PAS-55 also requires performance and condition monitoring so that continual improvements can be made to policies and procedures. As such, it provides a viable asset management implementation framework, but virtually no detailed implementation support. The elements of PAS 55 are defined such that they correlate with the requirements of other commonly employed international organizational frameworks including International Organization for Standardization (ISO) (Environmental) and ISO 9000 (Quality Management). There is an active effort underway through the International Organization for Standardization (ISO) to develop three international standards for asset management; ISO (overview), ISO (Management systems) and ISO (Guidelines). These products, which will use the PAS 55, International Infrastructure Management Manual (IIMM), and other international methodologies, are expected to be published in PAS 55 includes a methodology for assessment of asset management maturity. This methodology is often used by organizations to evaluate their progress toward implementation of the PAS-55 elements. U.S. Army Corps of Engineers 9

18 INTERNATIONAL INFRASTRUCTURE MANAGEMENT MANUAL The International Infrastructure Management Manual (IIMM) was developed originally in 2000, and updated in 2002, 2006, and The original development was led by the New Zealand National Asset Management Steering (NAMS) Group and the Institute of Public Works Engineering of Australia (IPWEA). These organizations were spurred into action due to government regulations in both nations that required use of asset management principles to manage infrastructure. Over the years, this document gained worldwide use, and the more recent editions have included contributors from around the world, including Canada, South Africa, and the U.S. Today, it is commonly seen as one of the most authoritative sources of asset management knowledge. Its methodology is in use by hundreds of organizations worldwide, including those listed in Table 1 below: 8 Organizations Using IIMM Asset Management Methodology Severn Trent Water (UK) United Utilities (UK) Aberdeen Harbour Board (UK) British Columbia Hydro (Canada) Network Rail (UK) London Underground (UK) UK Highway Agency New Zealand Transport Agency Transpower NZ Gas Association of NZ NZ City and District Councils (all) Various Australia City and District Councils (250+) Ports Australia Anglican Water (UK) Ontario Provincial Government (Canada) Various Canadian City and District Councils (10+) Scottish Power Scottish Water National Grid (UK) E.ON UK British Columbia Ministry of Transport (Canada) Water Supplies Department, Hong Kong National Grid Transco (NZ) Province of Nova Scotia (Canada) South African Department of Provincial and Local Government Infrastructure Canada Public Works and Government Services Canada City of Portland, Oregon Federal Highway Administration (US) Seattle Public Utilities Seattle Department of Transportation Orange County (CA) Sanitation District Tucson Water East Bay Municipal Utility District, CA Milwaukee Metropolitan Sewerage District City of San Diego BC Transmission Corporation (Canada) CE Electric UK CLP Power (UK) City of Cape Town, South Africa Table 1: Organizations using IIMM asset management methodology. Source: New Zealand Asset Management Support, International Infrastructure Management Manual, (2001). 9 IIMM FRAMEWORK The IIMM provides a much greater level of detail than PAS-55 in defining best practices for asset management. As such, it provides a complete cookbook for the development and implementation of 10 U.S. Army Corps of Engineers